News

Tuesday 28th November 2017

How can I transfer my personal allowance to save tax if I am married?

For the 2017/2018 tax year you can transfer 10% totalling £1,150 of your spouses or civil partners tax free allowance and save up to £230 on your Income Tax bill.
 
To benefit as a couple, the lower earner must have an income of £11,500 or less and the higher earner must have an income of between £11,501 and £45,000.  You must be married or in a civil partnership.    You can backdate your claim to include any tax year since 5 April 2015 that you were eligible for Marriage Allowance.

Example

Darren has been working as a dental nurse earning £18,000 and studying to become a dentist.  Darren pays income tax at the basic rate tax band of 20% on his earnings above £11,500.  His wife Divina doesn't work and looks after their three-year old son Duncan. 

As Darren is a basic rate tax payer earning between £11,501 and £45,000 they elect to transfer 10% of Divina's £11,500 tax free allowance to Darren.   Divina's allowance is now reduced from £11,500 to £10,350 and Darren's personal allowance is increased to £12,650.  As a result, Divina still pays no tax and Darren pays £230 (£1,150 @ 20%) less tax.

As Divina hasn't worked since 2015 and Darren has worked and payed tax in the two previous tax years the allowance transfer can be backdated to 2015.  This results in a further £432 tax saving to Darren.

 You can make a claim online at https://www.gov.uk/apply-marriage-allowance